In last Thursday’s Real Estate News post, I included a link to a story from the StarTribune. The Strib, citing the most recent Case-Schiller Report, claimed that the Minneapolis housing market suffered the worst decline in value than any other major market.
My good friend, Don Mailey, a real estate agent with ReMax, informed me of several flaws in the C-S methodology. He has graciously allowed me to include a link to his recent blog post on the subject, which you can read here.
So, what is the state of the Minneapolis-St. Paul housing market? I don’t think there is any denying that prices have fallen significantly since their peak in 2006. Still, the lower prices present some extraordinary opportunities for the savvy homebuyer or investor.
In the end, I’m sticking to my contention that the villains in the lingering housing doldrums are the government, the government and the government. The Obama Administration’s mortgage modification program has failed miserably, resulting in a prolonging of what was inevitable: people are going to lose their homes if they cannot afford to pay the mortgage which they originally qualified for. The homebuyer tax credit stabilized prices at artificially high levels, with the predictable crash coming once the tax credit expired once and for all. And, most importantly, various laws – the FHA’s 90 day seasoning rule, Minnesota’s Torrens statutes, and ridiculous fees such as the City of Minneapolis’ “rental conversion fee” create disincentives to investors who might otherwise purchase the discounted properties and enter into leases or contracts for deed.
To my last point, the biggest hurdle facing the housing market? A complete and utter lack of realism on the part of policymakers which drives a failure to accept that many people simply cannot afford to be homeowners. Once you accept that conclusion, the only logical way to pump life back into the housing market is to break down the barriers preventing investors from so doing.